Sierra Wireless Reports Fourth Quarter and Full Year 2017 Results - Full Year 2017 Revenue up 12.4% to $692.1 Million (USD)Friday, February 9, 2018
Revenue increases 12.6% year-over-year to $183.5 million in the fourth quarter of 2017
Richmond, BC, February 8, 2018--(T-Net)--Sierra Wireless, Inc. (NASDAQ: SWIR) (TSX: SW) today reported results for its fourth quarter and fiscal year ending December 31, 2017. All results are reported in U.S. dollars and are prepared in accordance with United States generally accepted accounting principles (GAAP), except as otherwise indicated below.
"In the fourth quarter of 2017, we delivered year-over-year revenue increases in each of our three segments, with particularly strong growth in our high margin Enterprise and IoT Services lines of business," said Jason Cohenour, President and CEO. "We also significantly strengthened our IoT Services business with the addition of Numerex, and are now better positioned than ever before to expand our IoT services and scale our subscription based recurring revenue."
Revenue for the fourth quarter of 2017 was $183.5 million, an increase of 12.6% compared to $163.0 million in the fourth quarter of 2016. Revenue from OEM Solutions was $139.8 million in the fourth quarter of 2017, up 3.4% compared to $135.2 million in the fourth quarter of 2016. Revenue from Enterprise Solutions was $31.8 million in the fourth quarter of 2017, up 52.0% compared to $21.0 million in the fourth quarter of 2016. Revenue from IoT Services was $11.9 million in the fourth quarter of 2017, up 73.5% compared to $6.8 million in the fourth quarter of 2016. The fourth quarter of 2017 includes $3.1 million of revenue from Numerex Corp. ("Numerex") which was acquired on December 7, 2017.
Subsequent to the acquisition of Numerex, our former Cloud and Connectivity Services segment was renamed IoT Services and now includes Numerex.
(1) See "Non-GAAP Financial Measures" and "Reconciliation of GAAP and Non-GAAP Results by Quarter" below.
Cash and cash equivalents at the end of the fourth quarter of 2017 were $65.2 million, representing a decrease of $9.0 million compared to the end of the third quarter of 2017. The decrease in cash was primarily due to the acquisition of Numerex partially offset by positive cash flows from operating activities.
FULL YEAR 2017
Revenue for 2017 was $692.1 million, an increase of 12.4% compared to $615.6 million in 2016. Revenue from OEM Solutions was $555.9 million in 2017, up 7.6% compared to $516.5 million in 2016. Revenue from Enterprise Solutions was $101.5 million in 2017, up 42.0% compared to $71.5 million in 2016. Revenue from IoT Services, including $3.1 million from Numerex was $34.7 million in 2017, up 25.5% compared to $27.6 million in 2016.
(2) See "Non-GAAP Financial Measures" and "Reconciliation of GAAP and Non-GAAP Results by Quarter" below.
On December 7, 2017, in accordance with the terms of the Agreement and Plan of Merger, dated as of August 2, 2017, we acquired all of the outstanding shares of Numerex in a stock-for-stock merger transaction (the "Transaction") whereby Numerex stockholders received a fixed exchange ratio of 0.18 common shares of Sierra Wireless for each share of Numerex common stock. On closing of the Transaction, Sierra Wireless issued 3,580,832 common shares as merger consideration in exchange for all of the outstanding shares of Numerex common stock and certain outstanding Numerex equity awards and warrants. Concurrent with closing, approximately $20.2 million of cash in the aggregate was paid to retire outstanding Numerex debt for total consideration of $97.5 million.
For the first quarter of 2018, we expect revenue to be in the range of $181 million to $189 million and non-GAAP earnings per share to be in the range of $0.04 to $0.10. Our guidance for the first quarter of 2018 includes a full quarter of Numerex following the acquisition of the company on December 7, 2017. We expect the first quarter of 2018 to be impacted by some unusual and mainly non-recurring items, including higher one-time costs related to a Numerex network upgrade and customer migration and tight component supply constraining revenue and adding to cost of goods.
Additionally, with the integration of Numerex, we have commenced various efficiency and effectiveness initiatives. These initiatives are focused on capturing synergies as we integrate Numerex and efficiency gains in other areas of our business. The initiatives being undertaken are expected to reduce cost of goods sold, as well as on-going operating expenses. As a result of implementing these initiatives, we are targeting a quarterly non-GAAP operating expense run rate of $56.5 million in the fourth quarter of 2018, down from approximately $59 million in non-GAAP operating expense that is included in our guidance for the first quarter of 2018. We expect these initiatives will result in a one-time non-GAAP restructuring charge of approximately $4.5 million.
This Non-GAAP guidance reflects current business indicators and expectations. Inherent in this guidance are risk factors that are described in greater detail in our regulatory filings. Our actual results could differ materially from those presented above. All figures are approximations based on management's current beliefs and assumptions.
Non-GAAP Financial Measures
We disclose non-GAAP financial measures as we believe they provide useful information on actual operating performance and assist in comparisons from one period to another. Readers are cautioned that non-GAAP financial measures do not have any standardized meaning prescribed by U.S. GAAP and therefore may not be comparable to similar measures presented by other companies.
Non-GAAP gross margin excludes the impact of stock-based compensation expense and related social taxes and certain other nonrecurring costs or recoveries.
Non-GAAP earnings (loss) from operations excludes the impact of stock-based compensation expense and related social taxes, amortization related to acquisitions, acquisition-related and integration expense, restructuring expense, impairment and certain other nonrecurring costs or recoveries.
In addition to the above, Non-GAAP net earnings (loss) and non-GAAP earnings (loss) per share exclude the impact of foreign exchange gains or losses on translation of certain balance sheet accounts, unrealized foreign exchange gains or losses on forward contracts and certain tax adjustments.
We use the above-noted non-GAAP financial measures for planning purposes and to allow us to assess the performance of our business before including the impacts of the items noted above as they affect the comparability of our financial results. These non-GAAP measures are reviewed regularly by management and the Board of Directors as part of the ongoing internal assessment of our operating performance. We also use non-GAAP earnings from operations as one component in determining short-term incentive compensation for management employees.
Adjusted EBITDA is defined as net earnings (loss) plus stock-based compensation expense and related social taxes, acquisition-related and integration expense, restructuring expense, impairment, certain other nonrecurring costs or recoveries, amortization, foreign exchange gains or losses on translation of certain balance sheet accounts, unrealized foreign exchange gains or losses on forward contracts, interest and income tax expense. Adjusted EBITDA is a metric used by investors and analysts for valuation purposes and we believe that it is an important indicator of our operating performance and our ability to generate liquidity through operating cash flow that will fund future working capital needs and capital expenditures.
|Investor and Media Contact:|
|Vice President, Investor Relations|
|+1 (604) 231-1137|
|David G. McLennan|
|Chief Financial Officer|
|+1 (604) 231-1181|
About Sierra Wireless
Sierra Wireless (NASDAQ: SWIR) (TSX: SW) is an IoT pioneer, empowering businesses and industries to transform and thrive in the connected economy. Customers Start with Sierra because we offer a device and cloud solution, comprised of embedded and networking solutions seamlessly integrated with our secure cloud and connectivity services. OEMs and enterprises worldwide rely on our expertise in delivering fully integrated solutions to reduce complexity, turn data into intelligence and get their connected products and services to market faster. Sierra Wireless has approximately 1,400 employees globally and operates R&D centers in North America, Europe and Asia. For more information, visit www.sierrawireless.com.
"AirPrime," "AirLink," and "AirVantage" are trademarks of Sierra Wireless. Other product or service names mentioned herein may be the trademarks of their respective owners.
Cautionary Note Regarding Forward-Looking Statements
Certain statements and information in this press release are not based on historical facts and constitute forward-looking statements or forward-looking information within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Canadian securities laws ("forward-looking statements") including statements and information relating to our financial guidance for the first quarter of 2018 and our fiscal year 2018, our business outlook for the short and longer term, statements regarding our strategy, plans and future operating performance; the Company's liquidity and capital resources; the Company's financial and operating objectives and strategies to achieve them; general economic conditions; expectations regarding the acquisition of Numerex; estimates of our expenses, future revenues, non-GAAP earnings per share and capital requirements; our expectations regarding the legal proceedings we are involved in; statements with respect to the Company's estimated working capital; expectations with respect to the adoption of IoT solutions; expectations regarding product and price competition from other wireless device manufacturers and solution providers; and our ability to implement effective control procedures.
Forward-looking statements are provided to help you understand our views of our short and long term plans, expectations and prospects. We caution you that forward-looking statements may not be appropriate for other purposes.
We do not intend to update or revise our forward-looking statements unless we are required to do so by securities laws.
Richmond, BC (Wireless)
Sierra Wireless, Inc.
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